Last month, activists and students barricaded the doors of the central Kiev branch of Sberbank, a Russian state-owned bank. The message: Stop the Kremlin from using profits made in Ukraine to fund its war against Ukraine.

The demonstration was a manifestation of growing popular fury over the perception that the primary beneficiaries of Ukraine’s economic policies are Moscow and local oligarchs with business interests in Russia.

The discontent had been bubbling under the surface for some time. When Russian President Vladimir Putin announced that state-funded banks in Ukraine would accept passports issued by separatist authorities of the Donbass republics, it finally boiled over.

Kiev responded to the latest outcry by issuing sanctions against Russian banks in the country and forbidding them from removing capital from Ukraine for a year, prompting most of the banks to start looking for a formal exit strategy from Ukraine.

This wasn’t the first time public pressure forced policy changes that are out of alignment with international efforts to accelerate economic reform.

In March, President Petro Poroshenko formalized an economic blockade of the Donbass region launched by activist groups and militia members in January. The government had previously kept some trade channels with occupied regions open, in part to avoid ruffling the feathers of oligarchs with business interests in the separatist-controlled areas. The move, like the recent imposition of sanctions against Russian banks, will likely be detrimental to Ukraine’s immediate economic growth — although activists see it as strengthening Ukraine in more meaningful ways.

Protesters light flares after building a wall to block the entrance of a branch of Russian bank Sberbank in Kiev on March 13, 2017 | Sergei Supinsky/AFP via Getty Images

Since 2014, almost 10,000 Ukrainians have died in a war with a country that remains its largest trading partner and investor. Kiev is awash in rumors of oligarchs profiteering from the war and stalling anti-corruption measures.

To Ukraine’s international backers, Kiev’s economic reforms project a sense of progress and stability. For most Ukrainians, however, they are seen as perpetuating a corrupt system at the expense of the country’s citizens. And if reforms are crafted to benefit the elite, they believe, Western-backed economic reforms are contributing to this landscape.

Ukrainians absorb the cost of reforms and debt restructuring on a daily basis in the form of pension cuts, a weakened currency and hikes in energy prices. Meanwhile, Ukraine’s oligarchy is doing just fine — partly because of their continued connection to Russian economic interests.

This misalignment, if left unaddressed, it could lead to unrest that would threaten not only the reforms themselves — but also the post-revolutionary order that the West is keen to keep in place.

Nowhere is the gulf between international backers’ perception of reforms and the reality on the ground as wide as on the issue of National Bank of Ukraine (NBU) and its governor, Valeria Gontareva, who resigned Monday.

Ukraine’s Western partners and international organizations such as the International Monetary Fund have praised the NBU’s reforms, arguing that the closure of banks labeled as insolvent helped to prevent the total collapse of the banking system and stabilize the hryvnia after a steep decline. Gontareva’s supporters see her as aggressive and capable, navigating a tough political environment and delivering on reform at a time when many of her peers have not.

She is far less popular with common Ukrainians. More than 1.5 million Ukrainian households lost their savings because of the NBU’s policies. About 163 billion hryvnia in individual and corporate deposits were lost as a result of bank closures, which disproportionately impacted small and medium (aka non-oligarch) businesses.

Gontareva has also faced heavy criticism as Ukraine’s anti-corruption bureau in January launched an investigation into allegations of corruption against her and NBU executives, who allegedly helped Russian state-owned banks evade sanctions. Just last week, the bureau conducted new raids on NBU, and claimed that billions of hryvnia may have been embezzled by its leadership during the banking reform. While no charges have been made against Gontareva yet, transactions were too large to have happened without NBU management involvement, according to the bureau.

The real influence of Russian banks in Ukraine is hard to measure, but as local banks were nationalized — the share of state-run banks now tops 50 percent — loans for small businesses and regular citizens grew scarcer, meaning Russian banks controlled a significant percentage of lending during the economic crisis.

The Kremlin’s banks may now leave Ukraine, but Russians will still own stakes in Ukrainian financial institutions. Sberbank Ukraine, for example, has already sold its assets to a consortium of investors headed by the son of a Russian oligarch. The National Corps has announced they will start a new blockade this week against all remaining Russian banks, accusing the NBU of taking “no real action” and accusing Gontareva and Poroshenko of protecting the banks. The NBU has asked law enforcement to prevent the blockade. The investigations against the NBU proceed, and this will be a complicated landscape for Western advisers to navigate: both the NBU and NABU are Western-backed projects.

Critics of the reforms argue that they have further consolidated the economy into the hands of a hidden few and ignored the impact on average Ukrainians. Gontareva’s international supporters have so far deflected criticisms as the complaints of oligarchs targeted by reforms, but the popular discomfort with Russia’s unchecked economic influence in Ukraine — and the ongoing footsie between the economic elite of warring nations — is unlikely to be quelled anytime soon. Gontareva’s resignation announcement — in which she cited IMF support as proof that corruption charges are baseless — will do little to change this.

The real fight against corruption has not yet begun. Previous Ukrainian “reforms” failed when they represented the interests of a narrow economic class, rather than a vision for national strength. Ukrainians now see this cycle repeating, and we shouldn’t be surprised by further protests and local initiatives.

This should be a warning to Ukraine’s international supporters that they must start paying attention to these internal pressures or risk the failure of another revolution.

Molly K. McKew (@MollyMcKew) advises governments and political parties on foreign policy and strategic communications. She was an adviser to Georgian President Mikheil Saakashvili’s government from 2009-2013, and to former Moldovan Prime Minister Vlad Filat in 2014-2015.

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edel

Is it only me that I do not see relationship between the title and the article?! Even if we consider that Russia is the only perpetrator in the Ukraine fiasco (a long shot in my opinion), all these policies are baked in Kiev only.

The actions of Kiev after Maiden (lets forget how this started) has been very unfortunated. First bombing civilian populations and further antagonizing them, then cutting pensions. Then calling them all pro-Russians (unlike Crimeans, they never asked for annexation) and finally the blockage (not even Russia has a full Ukraine blockage as East Ukraine does!).

Let’s remember that east Ukraine just wanted more self-governing but never asked for independence, let alone annexation. Why was so hard for Kiev to grant that (as per the Minsk agreement or even before that)? Germany, Spain, Switzerland and UK offer much higher degrees of decentralization than even east ukrainiasn asked for? Of course, now in 2017 I don’t believe they are many left they will regard with much love to Kiev there. Don’t you think people in Dombass will look with certain envy to those in Crimea now?

Posted on 4/11/17 | 7:52 AM CET

From Warsaw with love

@edel

It’s ridiculous how you’re trying to whitewash Russia and ignore her obvious responsibility fpr the war. Moreover, you do that through the same twisted logic ruSSofascists use to deny their country’s responsibility for many other crimes, the Robbentrop-Molotov alliance with Hitler and the Katyn Massacre to begin with. A coincidence? I don’t think so.

By the way, how’s the weather in St. Putinsburg? Do you have windows in a ruSSofascist troll factory you work at, or have you been relocated to a basement?

Слава Україні! Героям слава!

Posted on 4/11/17 | 9:22 PM CET

jax

@from warsaw with love
Edel makes some valid points. You dont make any points.
You are clueless trying to blame Soviet for ww2 and at the same time complain about näzis.
By the way, the wheater is good in Sweden.

Posted on 4/11/17 | 10:49 PM CET

edel

[@From Warsaw with love] I am a western European living in the US, so hardly a Russian anything. I have commented in a variety of other topics whether UK, Africa, US, South Asia, South America and of course EU. Like @jax mentioned, we all would had benefit if you had brought anything substantial to the conversation than rather pure bashing,

As mentioned, I did not write in who is to blame for the conflict, but rather about that the subsequent Kiev policies where a disaster and that it further antagonized the east. In other words, the policies made where more to satisfy the tiny but influential ultra-nationalist in Kiev than better enticing the disfranchised east back to a united country.

Finally, I thing we should be over these pathetic slogans of war you said at the end, at least with Politico reader’s. I have seen them in countries at war (I’d lived in quite a few countries)! They are designed in engaging people into action (warmongering) but without letting room for a thoughtful discourse first of why so.

Posted on 4/12/17 | 7:11 AM CET

edel

edel
[@From Warsaw with love] I am a western European living in the US. Like @jax mentioned, we all would had benefit if you had brought anything substantial to the conversation than rather pure bashing,
As mentioned, I did not write in who is to blame for the conflict, but rather about that the subsequent Kiev policies where a disaster and that it further antagonized the east. In other words, the policies made where more to satisfy the tiny but influential ultra-nationalist in Kiev than better enticing the disfranchised east back to a united country.
Finally, I thing we should be over these pitiable slogans of war you said at the end. I have seen them in countries at war. They are designed in engaging people into action (hawkishness) but without letting room for a thoughtful discourse first of why so.

Posted on 4/12/17 | 8:03 AM CET

Peterke

Please, don’t be too big-hearted about Ukraine. Some people may think that once Ukraine is nearly accepted in the EU, this makes that country complying all EU democratic standards, etc. That’s not quite true. To know why, you need to see this petition to president of Ukraine https://petition.president.gov.ua/petition/35671 The problem is that such petitions are absolutely not helping the Hungarian minority in West Ukraine. These days, Ukraine is literally awash with nationalism spirit. To a large extent, the problem of Hungarian minority for Ukrainians sounds like that: no Hungarian minority – no problem. Sad but true, it is Hungary itself that can help Hungarian minority in West Ukraine. That needs action.

Posted on 4/12/17 | 11:11 AM CET

Luc

@ edel
Agree with you. There is no relation between the title and the article. But nowadays it is mainstream thinking in the West that whatever goes wrong in the Ukraine, is Russia’s guilt.
The problems in the Ukraine can not and will not be solved in Berlin, Moscow, Washington or even Minsk. They can only be solved in Kiev. In my opinion the Ukraine within the today boundaries can only survive as a federal state, with some rights and power on local level. Not only in Donbass, but also in Charkiv/Kharkov, Odesa/Odessa, Lviv/Lvov/Lwow/Lemberg/Lemberik, etc.
My own country Belgium could not survive as a unitarian state. So we federalised it. Without shelling, ATO or blockades whatever.